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Update Alerts

China injects liquidity, triangular debt worries rise

24 August 2012

The People’s Bank of China (PBoC) injected Rmb278bn through open market operations this week, equivalent roughly to a 25bp cut in the bank required reserve ratio (RRR). The move to loosen liquidity comes as official alarm grows over rising levels of “triangular debt” between enterprises, government entities and banks. We think Beijing is set to step up efforts to stimulate the economy as weak exports, sluggish domestic investment and debt-ridden Local Government Financing Vehicles (LGFVs) weigh on growth.

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